Dalian: As reported by Splash last week Rongsheng Heavy Industries waited until Monday evening to announce it has signed a deal with a fellow Chinese company to sell of its shipyards.
Rongsheng, one of China’s most high profile shipyard casualties, said it has signed a memorandum of understanding with a compatriot company, thought to be Yangzijiang Shipbuilding, to offload its core assets and liabilities of the onshore shipbuilding and offshore engineering business.
The MOU shall remain in effect until 30 June 2015. If the related parties have not entered into a related formal transaction agreement by that date, they shall further negotiate and confirm whether they should sign an extension of the MOU, Rongsheng said in a statement.
As a sign that the group has moved on from its shipbuilding origins Rongsheng shareholders approved for a change to the company’s name to China Huarong Energy Company last Friday.
Splash understands that Yangzijiang Shipbuilding and a trio of banks have come in to save the shipyard, with Beijing’s support.
According to an industry source, Yangzijiang Shipbuilding will acquire 20% equity in the financially troubled shipyard, three banks coordinated by the Jiangsu government, namely Minsheng Bank, China Everbright Bank and China Development Bank, will together acquire 40% equity, Rongsheng’s founder Zhang Zhirong and some major shareholders of the yard will occupy 20% equity, and the remaining shares will be taken by smaller investors.
Rongsheng said in a statement: “In light of the depressed shipbuilding market, the shipbuilding business of the group has encountered operational difficulties.” It said the disposal would help transform it into an energy service provider focusing in the oil and natural gas market.